9911796707
TMI Blog2024 (3) TMI 1065X X X X Extracts X X X X X X X X Extracts X X X X ..... 3110/M/2023 has raised following grounds of appeal: - "1. Whether, on the facts and in the circumstances of the case the Learned CIT (A) erred in deleting additions of Rs. 8,28,903/- on account of unexplained opening balance of cash by stating that the same is out of unaccounted business receipts disclosed by the assessee when the assessee did not submit such details and failed to substantiate its claims with any supporting documents during the assessment proceedings? 2. Whether, on the facts and in the circumstances of the case the Ld. CIT(A) erred in deleting additions of Rs. 73,84,000/- and Rs. 50,00,000/- on account of internal transfer of cash when the assessee had failed to substantiate its claim stating that the same was accepted in AY 2018-19 without appreciating the fact that in the AY 2018-19, the assessee had submitted documentary evidence to prove the same whereas for the year under consideration the assessee did not submit such details thereby the Ld. CIT(A) ignored these facts and adjudicated the ground in favour of the assessee without any supporting documents produced by the assessee to substantiate its claim? 3. "Whether, on the facts and in the circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts have been made through cheques? 9. Whether, on the facts and in the circumstances of the case the Ld. CIT(A) erred in accepting the contention of the assessee that the amount of Rs. 46.54 crores mentioned in seized document, was paid to the MIDC through cheque in respect of 281 plots whereas the total value of the 281 plots works | out to Rs. 60.12 crores. The Ld. CIT(A) ignored the fact that the seized documents do not show that the payments were made by cheques and the amounts mentioned in the seized document do not match with the value of plot as per assessee's submission. Therefore, the transaction mentioned in seized document represent cash receipts by the assessee? 10. Whether on the facts and in the circumstances of the case the Ld. CIT(A) erred in allowing the claim of expenses @ 30% out of unaccounted business receipts offered without appreciating the fact that the assessee has not submitted any documentary evidences that 30% of the expenses were incurred for the earning of such income and no evidence was submitted by the assessee regarding the claim of expenses?" 03. Assessee M/s GNP consultancy and solutions private limited has raised following grounds of ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/- Rs. 3,80,000/- + Rs. 20,80,000/-) as alleged unaccounted business Income from three land transactions on the basis of the seized documents without considering the detailed submission made by the assessee that no transactions are carried out by them as it did not materialized. 3.2) On the facts of the case, in law and under the circumstances, the Learned CIT (Appeal)-Central erred in confirming the addition of Rs. 51,32,900/- by presuming that assessee has earned alleged unaccounted business income out of said three land transactions without any sustainable basis or any other documentary proof or other corroborative evidence to that effect. 3.3) On the facts of the case, in law and under the circumstances, the Learned CIT (Appeal)-Central erred in confirming the addition in respect of alleged receipts from the said three land transactions merely on the basis of WhatsApp Chat, which is at the most secondary evidence and without any independent verification made to that effect by the Ld. AO or even the Ld. CIT(A) himself. 3.4) In any case, the addition made by the Ld. AO and as affirmed by the Ld. CIT(A) is unsustainable since the same is made without considering the materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd unaccounted expenditure based on documents seized during search. The LD AO made addition of unaccounted business receipt of Rs 56.43 Cr and addition of unaccounted unexplained expenditure of Rs 5.48 Cr. 08. Assessee, aggrieved with assessment order preferred an appeal, which was decided on 2/6/2023 deleting the additions partly, and therefore both the parties are in appeal before us. 09. Ld. AR filed a three-volume paper book, chart of the issues that was considered while deciding cross appeals. 010. First, we deal with the appeal filed by the learned AO, which has almost ten effective grounds. 011. The first ground of appeal is with respect to the addition of Rs. 8,28,903/- deleted by the learned CIT - A . Ld. AO made it on account of unexplained opening balance of cash by stating that the same is out of unaccounted business receipts disclosed by the assessee when the assessee did not submit such details and failed to substantiate it claim with any supporting documents during the assessment proceedings. 012. This aspect has been dealt with by the learned AO in paragraph number 6 wherein the unaccounted business income and unexplained expenditure under section 69C of the ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the assessee was issued further questionnaire to explain as to why unaccounted receipts pertaining to the year FY 20-21 under consideration of Rs. 12,586,500/- [ Comprising of Rs 42,27500/- MIDC Plot consultancy income + Cluster Consultancy Income + Rs 73,84,000/- branch internal transfer entries] and opening balance of Rs. 828,903 should not be considered as unaccounted business income and a further sum of Rs 130,30,419 [ being various expenditure pertaining to F Y 20-21 in that sheet] not be considered as unexplained expenditure. 015. Assessee filed detailed letter dated 09/09/2022 and 30/12/2022 where in it is submitted that :- i. MIDC plot consultancy income of Rs. 42,27,500 and cluster consultancy income of Rs. 975,000 amounting to Rs. 52,02,500 has already been offered as income under section 132(4) of the act impugned assessment year. ii. Assessee has claimed deduction of 30% of the expenditure as it is also evident in the seized document. The expenditure is stated in the seized documents are 30% of the receipt. iii. No separate claim of the expenditure out of the unaccounted income is made. iv. Separate working of internal transfer of 73,84,000 the internal tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure of Rs. 13,030,409 under section 69C of the act and (3) addition of Rs. 828,903/- opening balance therein. 018. These additions were challenged before the learned CIT - A as per ground number 7 before him. The learned CIT - A appreciated from the seized documents; it is inferred that there is an opening balance for assessment year 2021 - 22 (financial year 2020 - 21) of Rs. 828,903/-. The total receipts are shown of Rs. 13,415,403 for financial year 2020 - 21 and Rs. 1,40,68,904 financial years 2021 - 22 totalling to Rs. 23,055,400. Out of the total receipts the MIDC plot consultancy charges of Rs. 4,227,500 for financial year 2020 - 21 and Rs. 2,250,000 for financial year 2021 - 22 totalling to Rs. 6,477,500/- and further cluster consultancy fees of Rs. 975,004 financial year 2020 - 21 and Rs. 2 lakhs for financial year 2021 - 22 totalling to Rs. 1,175,000/- has been offered by the assessee as net income after claiming expenses at the rate of 30% thereon in his statement under section 132 (4) as well as in the return of income. He further held that there are internal transfer of funds from one office or branch of the assessee to the other office and branch of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out of the funds available from the above unaccounted business receipts offered by the assessee and its group. vi. AO has made an addition without making any verification, but explanation of the assessee was rejected without any cogent reason. vii. Accordingly, he deleted the above opening balance of Rs. 828,903/-. viii. With respect to the internal transfer of funds, he found that a sum of Rs. 73,84,000/- is the internal transfer of funds for financial year 2020 - 21 and Rs. 8,018,904 financial year 2021 - 22 totalling to Rs. 15,402,900. The above sum was stated to be internal movement of funds from one office or branches to the other office and branches of the assessee. The claim of the assessee is that this amount contains various entries of movement of funds from one office/branch to another office branch. The assessee is engaged in the business of consultancy and construction business and having different sites of construction and consultancy business in their offices are geographically spread across Maharashtra at Mumbai, Mayhap, Dombivli, Thane, Kalyan, Pune and Kolhapur. ix. The seized documents contains that the amount has been transferred from one office to anothe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition of opening balance of Rs. 8,28,903/-, (2) addition of Rs. 7,384,000 in respect of internal transfers. 020. The learned assessing officer has challenged the deletion of the addition of Rs. 828,903/- as per ground number {1} and the deletion of the addition of Rs. 7,384,000 covered in ground number {2} of the appeal. 021. The learned departmental representative vehemently supported the order of the learned assessing officer and challenges the deletion of the addition holding that deletion is incorrect. He referred to the assessment order at page number 9 wherein the addition has been discussed by the learned assessing officer and Para number 9.5 of the order of the learned CIT - A for reasons given by him deleting the above addition. He further stated that. i. Assessee has to substantiate the benefit and linkage between the amount disclosed by him as total income as undisclosed income and telescoping of such undisclosed income with the amount of addition deleted by the learned CIT - A of opening balance. ii. There is no centralized record of the balance available with the assessee as an opening balance and therefore the benefit given by the learned CIT - A of telescopin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated in the seized papers. v. These facts were also clarified before the learned Deputy Director of Income Tax (investigation) who has also accepted. vi. Such transfers are not income at all. vii. He further stated that all these documents were made available before the assessing officer along with the reply submitted before the DDIT {investigation} and therefore the addition is correctly deleted by the learned CIT - A. viii. Explanation of the assessee during search, before the investigation Wing as well as before the learned assessing officer remains the same. ix. identical question arose in the case of the assessee for assessment year 2018 - 19 which is recorded by the learned CIT - A and the learned assessing officer after detailed questioning, considering the explanation of the assessee, made no addition on this account. x. There is no infirmity in the order of the learned CIT - A. 024. We have carefully considered the rival contention and perused the orders of the lower authorities. Ground number 1 is with respect to the deletion of addition of Rs. 8.28 lakhs as an opening balance in the seized documents and a sum of Rs. 73.80 lakhs being internal transfers is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onourable Bombay High Court also in case of 61 taxmann.com 357 has also categorically held that when the income has already been taxed, its subsequent withdrawal cannot be taxed once again. viii. Thus, in absence of any other adverse fact pointed out by the learned assessing officer, we do not find any infirmity in the order of the learned CIT - A in granting the benefit of telescoping. ix. Thus, taking into consideration all the factors of disclosure made by the assessee for which telescoping has been granted, fund flow statement of additional income offered of Rs. 27.74 crores, consistent statement of director, staff, and submissions before the investigation Wing and the assessing officer, clearly establishes that the addition of Rs. 828,903/- is correctly deleted. 025. Accordingly, we uphold the order of the learned CIT - A in deleting the addition of Rs. 8,28903/- of the opening balance in the seized documents. Ground number 1 of the appeal is dismissed. 026. Coming to ground number 2, which has two parts (1) addition of Rs. 73.84 lakhs and (2) further addition deleted of Rs. 50 lakhs on account of transfer of cash? The part of the addition of ground number [2] amounting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of explanation of each entry along with the name, permanent account number and address of the parties involved along with the documentary evidence. The assessee submitted that that the above document belongs to Mr. Patil and that only some of the transactions are pertaining to the assessee. Statement of Mr. Patil was also recorded by the learned assessing officer who also made similar claim but failed to substantiate the transactions. Mr. Patil categorically accepted that the evidence was prepared by him as he is an Angadia, however, he could not identify even a single party other than the assessee in those transaction. It is also a fact that Mr. Patil forwarded it to the director of the company over WhatsApp. Mr. Patil stated that the evidence is the running Ledger of the cash with him of different parties however except the assessee he could not provide any explanation in respect of any other party. Therefore, the learned assessing officer issued a show cause notice, which was replied by the assessee but rejected by the learned AO and stated that it cannot be accepted that the said evidence belongs to Mr. Patil. Therefore the learned assessing officer held that these transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the document sent by Mr. Patil to the director. Out of the above transaction, a transaction of Rs. 185 lakhs of receipt and Rs. 17,088,000 of payment belongs to Mr. Sailesh Patil. Further, there is a construction income of Rs. 3,650,000/- construction expenditure of Rs. 9,92,750/-. Further, the transaction also shows that the consultancy income of Rs. 190 lakhs and expenditure of Rs. 4,07,000/- has been recorded. The transaction also shows, as an internal transfer of funds of Rs. 50 lakhs is receipt and payment of Rs. 10 lakhs. There were other receipts of Rs. 51,000,000/- in the statement. Accordingly, total income of Rs. 259,601,306 was stated to be receipt and Rs. 1,94,87,752/- was stated to be outflow. 031. The learned CIT - A has categorically held that transaction that has not been owned up by the group, but which has been owned by on the other hand by Mr. Sailesh Patil cannot be the basis of addition in the hands of the assessee. Accordingly based on the various entries categorized he held that :- i. a sum of Rs. 162,451,306/- being the opening balance as per the document and sum of Rs. 1 Crore dated 14/3/2021 where there is no name appearing of any party cannot be adde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove sum has not been disclosed in those other group concern, then the addition of Rs. 36.5 lakhs and confirmed in the hands of the assessee. vi. With respect to the addition of Rs. 50 lakhs it was stated that it is an internal movement of funds from one office to another office of the same assessee through Angadia Mr. Sailesh Patil. Therefore, as it is an internal movement of the funds made by the assessee from one office to another office, the addition was deleted. Such transaction is recorded at serial number eight wherein on 12 March 2021 that is a reference that the sum of Rs. 50 lakhs has been transferred from Nariman point office. Thus, the learned CIT - A deleted the same. vii. With respect to a sum of Rs. 510 lakhs being total of entry at serial number 10 dated 13 March 2021 of sukhakarta clusters of Rs. 210 lakhs stated by the assessee in his statement that it is a cash received by the assessee but he does not remember the details and another entry at serial number 19 dated 15 March 2021 pertaining to Mr. Nilawar of Rs. 300 lakhs containing the deduction of Rs. 8500 stated to be consultancy charges received in cash from Mr. Prashant Nilawar in respect of sale of land i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed ground number 2, 3 and 4. He also collectively argued the addition confirmed by the learned CIT - A against which the assessee is in appeal. Such additions are of Rs. 85 lakhs and Rs. 510 lakhs. 035. He referred to the document found during search from mobile phone of the director of the company a document that was sent by Mr. Sailesh Patil. He submits that except the assessee, neither the director Nor Mr. Patel could explain to whom other transactions belongs to. He further stated that why an Angadia will send the details of the other parties to the assessee. He further referred to the statement wherein 25 different entries were found of receipt of cash and payment of cash. Therefore, the whole transaction belongs to the assessee only. He further stated that assessee did not deny that not all the transactions are belonging to the assessee, but it says that some of the transactions belong to the assessee and some of the transaction does not belong to the assessee without staying to whom it belongs. From the document, it is apparent that Mr. Sailesh Patil is engaged in the movement of cash from and to the assessee. He further referred to the provisions of section 292 of The Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned assessing officer has merely drawn adverse inference. Naturally, the document has been sent by Mr. Sailesh Patil so for such document belongs to Mr. Sailesh Patil and the director is merely a receiver of that document. 039. Coming to second part of ground number 2 of the appeal wherein an addition deleted by the learned CIT - A of Rs. 50 lakhs on account of internal transfer is contested by revenue, he submitted that Rs. 50 lakhs is on account of entry number 8 dated 12 March 2021. He submitted that there is a transfer from Nariman point office of Rs. 50 lakhs in Cash through Mr. Sailesh Patil to another branch. Therefore, there cannot be any income therein. He also referred to paragraph number 10.15 of the order of the learned CIT - A wherein it is mentioned that the learned CIT - A has also accepted that it is an internal movement of fund from one office place to another office place of the assessee through Angadia. Therefore, it cannot be the income in absence of any other evidence available with revenue. 040. On the issue of ground number 4 of the appeal wherein the learned CIT - A has deleted the addition of Rs. 33 lakhs and Rs. 350,000. He submitted that at serial num ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh by the Angadia Mr. Sailesh Patil. Thus, the claim is that it cannot be the income when the money is transferred from one office to another office. The learned CIT - A in paragraph number 10.15 has deleted the addition holding that this is an internal movement of funds made by the assessee from one office to the another office and therefore it does not have the characteristics of income as it is evident that assessee is operating at various places such as Nariman point, Mahape, Thane , Dombivli and Kalyan . The learned assessing officer also did not dispute the above fact. Therefore, we confirm the order of the learned CIT - A in deleting addition of Rs. 50 lakhs being internal transfer of funds from one office to another office of the assessee. Accordingly, ground number 2 of the appeal of the AO is dismissed. 043. Ground number 3 of the appeal is with respect to the finding of the learned CIT - A that the transaction appearing in the image of the document retrieved from the mobile phone of Mr. Kaustubh Latke Director of the assessee company during the course of search belongs to Sri Sailesh Patil without appreciating the fact that Sri Sailesh Patil could not identify even a si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iv. He further confirmed that he collects cash from the various offices of the assessee and delivers the cash according to the instruction. v. In reply to question number 26 he has categorically stated that the content of the transaction of the WhatsApp image sent by him to the director of the assessee company is related to various persons and groups including the assessee and it belong to various parties. vi. The AO made the addition of all the transactions stated therein. vii. The learned CIT - A in paragraph number 10 - 10.11 has categorically held that that the statement of the assessee, statement of Mr. Sailesh Patil were not refuted by the learned assessing officer by showing any cogent evidence and in absence of such evidence, the statements given by the assessee as well as third party Mr. Sailesh Patil could not be disregarded. He further categorically held that the transaction with which the assessee group has entered with Mr. Sailesh Patil has been owned by the assessee in its income. The transactions which have not been owned by the assessee, both the parties i.e., assessee as well as Mr. Sailesh Patil stated that these transactions are not related to the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13.65 crore 'on money' income from construction activity. Further, the claim of the assessee that sum of Rs. 3,50,000 has also been similarly assessed in the hands of M/s Roshani Enterprises, another group concern. In view of these facts, we do not find any infirmity in the order of the learned CIT - A in deleting the addition of Rs. 36.50 lakhs of the income contained in the WhatsApp message which is already offered by the other group concern as per income, subject to verification by the ld. AO, therefore same cannot be added once again in the hands of the assessee. Accordingly, ground number 4 of the appeal is dismissed. 047. Ground number 5 is with respect to the addition of opening cash balance of Rs. 13.41 crores deleted by the learned CIT - A where the AO submits that assessee has failed to substantiate its claim with any documentary evidence that the opening balance and the receipts were out of the unaccounted income disclosed by the assessee. 048. The facts as culled out from Para no 8 of the assessment order relating to this ground show that during search photo of a document was received from the mobile phone of the director Mr. Kaustubh Latke. He was confronted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue as per ground number 9 of appeal before him at paragraph number 12 of appellate order. He held as under:- "12.2 it is noticed that during the course of search, carried out on the group WhatsApp image was extracted from the mobile phone of Shri cost to latke director of the company and same was confronted to him in reply to question number 45/46 of his statement dated 23/9/2021 recorded under section 132 (4) of the act by the DD IT (investigation). It was replied by him that it is GNP groups consultancy and construction business account and it contains the details of payment made by the GNP group to the contractors and payment received by the GNP group from their clients. All the transactions were stated to be entered into cash and not accounted in the books. It was further clarified in question number 46 that part of the receipts are of projects of the group namely gallery and Arcadia constructed by assessee group concerns and it was found that the said document dated 26/8/2020 contained cash balances available at various addresses, sites of the assessee group namely at head office, turn a account, Kalyan account, Powai account, Nariman point, Pune et cetera Sanjay Aggarwal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... findings contrary to the explanation submitted by the assessee during the assessment proceedings. According to the assessee, while the AO has accepted partly the transactions of contract entries mentioned in the said document, the explanation regarding the amount of Rs. 13.41 crore as cash balance available at different offices as per the sheet has been rejected and addition is made. In this regard is also submitted that the AO cannot accept the content of the document in part and ignore the rest has this is not permitted under the law. In this regard the assessee has relied on the decision of glass lines equipments Co Ltd versus CIT reported in 253 ITR 454 (Gujarat)....... 12.4 assessee also submitted that it has filed a fund flow statement of unaccounted income offered by the group and its application on page number 44 of the paper book and there was a cash balance available of Rs. 14.27 crores at the end of the year out of a additional income offered by the group up to 31/3/2021 and the said balance always was available which explains the above cash balances lying at various offices. 12.5 I find that this ground pertains to the addition made by the AO on the basis of certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search. Keeping this fact in mind along with the fact that no cash for this magnitude had been seized and also that the assessee to whom the documents belonged has explained the contents thereof which are not refuted with any other evidence whatsoever, the addition seems to be springing out of the suspicion. In my view, once income is already offered to tax by various entities of the GNP group, taxing the same again would lead to double taxation and such double taxation is not permitted under the act. ......... 12.7 Thus it emerges that once the income is already offered to tax, the same cannot be treated as income again merely because such income is reflected in the form of assets et cetera. Therefore, the addition springing out of assumption of the AO is not permitted under the act. It is also pertinent to note that there is a transfer of cash from one office to another out of the unaccounted business receipts of the group and this is a regular feature and found in various seized documents. On similar facts in assessment year 2018 - 19, such internal movement of transfer of funds being out of business receipts of the group offered to tax has also been duly accepted by the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o show that it is a daily cash statement and opening balances are coming from the respective earlier date. With respect to the explanation about the transfer of funds, he referred to page number 1164 of the paper book stating that it is the whole fund flow statement of the group which has already been considered for the purpose of overall disclosure made by the group. With respect to the availability of Rs. 6.45 crores, he referred to page number 45 wherein the above is a cumulative balance out of Rs. 37 crores. Accordingly, it was stated that there is no infirmity in the order of the learned CIT - A holding that the cash balances stated in the statement found during search has already been part of the disclosure made by the assessee. He submitted that total disclosure made by the assessee is Rs. 78.64 crores and out of that, the disclosure on account of consultancy receipt is Rs. 23.67 crores. The balance disclosure of Rs. 54.74 crores consists of real estate receipts. Therefore, there is no reason to disbelieve the explanation of the assessee that the balances stated in the statement have already been considered for the disclosure. With respect to the assessment year 2018 - 19 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dence are found that there is investment out of such undisclosed income prior to that date. Apparently, in those circumstances, the assessee did not have such cash available on that date. Such is not the case here. We have examined this aspect and find that for assessment year 2018 - 19 assesseehas disclosed gross receipt of Rs. 19.73 crores, for assessment year 2019 - 20 of Rs. 11.60 crores and for assessment year 20-21 assessee has disclosed total receipt of Rs. 6.48 crores. Thus, it is evident that prior to the date for which the cash statement was found the assessee has already disclosed the income of more than Rs. 30 crores. Further, there is no evidence that this sum of Rs 30 Crores is invested prior to 26/08/2020 somewhere else and assessee did not have source of such cash with it. Therefore, it cannot be denied that assessee did not have the explained or disclosed sources of income resulting into cash on hand on 26/8/2020 of Rs. 13.44 crores. This fact has not been denied that assessee has already offered income for earlier years prior to the date of the cash statement income, which is much more than cash on hand shown on 26/8/2020. It is not the case of revenue that assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penses. In paragraph number 6 of the assessment order, it is discussed. This is also discussed while deciding ground number 1 of the appeal of the AO. In the said document opening balance of Rs. 828903/- and total deposits of Rs. 23,055,400 and the total payments of Rs. 23,822,348/- were disclosed. When confronted the assessee submitted that the total deposits of Rs. 23,055,400/- is pertaining to the internal transfers, consultancy fees received and income from consultancy of clusters. Apart from the internal transfers, it was further stated that some of Rs. 5,202,500/- and Rs. 2,450,000/- has already been disclosed as consultancy income for the respective assessment years. With respect to the opening balance, the assessee submitted that it is part of the disclosure already made. With respect to the various expenses, it was submitted that such expenses should be granted to the assessee as a deduction. The learned AO disbelieved and made an addition of Rs 130,30,409/- as an unexplained expenditure under section 69C of the act. 056. Similarly, statement was found for the period from 11/3/2021 to 16/3/2021 during search which disclose the opening balance of Rs. 162,451,306/-, total r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctor was to approve the same over the WhatsApp chat. The AO agreed that though there is no physical signature of the director of the company however same have been approved by the director as confirmed by the executive assistant it was found that several such approvals were found amounting to Rs. 6,683,600/-. These vouchers were pertaining to four different financial years. For financial year 2020 - 21 such sum of Rs. 5 lakhs, the learned assessing officer questioned the assessee, assessee denied stating that payments have been made against these vouchers are unsigned. The learned assessing officer rejected the explanation and made an addition of Rs. 5 lakhs as per paragraph number 11.8 of the assessment order. 060. During search the WhatsApp chat of the directors from iPhone 12 pro-was retrieved wherein some unaccounted transactions were found. The assessee was questioned as per question number 97 of the statement of the director recorded on 27/9/2021. The director was unable to explain the same. From the document it was found that the above cheques are related to the purchase of land of Rs. 5.345 acres by one Shri Rajesh Shah and the GNP charges mentioned are Rs. 5 lakhs per acr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and therefore the net income is to be estimated and no separate addition is required to be made under section 69C of the act as held by the honourable Bombay High Court in case of Golani Bros (2017) 85 taxmann.com 355 (Bom). Similar view has also been taken by the honourable Delhi High Court in 349 ITR 85. Accordingly in paragraph number 15.13 after discussing the plethora of judicial precedents the learned CIT - A held that since the entire receipts found as a business receipt under section 28 of the act has been considered, deduction of expenditure must be granted to the assessee and net income is to be estimated. Therefore, separate addition in respect of unexplained expenditure cannot be made. Accordingly, he deleted the entire addition of Rs. 5.48 crores. Thus, the learned assessing officer is aggrieved and is in appeal before us. 063. The learned departmental representative vehemently supported the order of the learned assessing officer and submitted that when each of the document, the income has been added separately, the expenditure which has also been stated in the same documents are also required to be adjusted under section 69C of the act. Argument of the learned depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t there of the explanation offered by him is not in the opinion of the assessing officer satisfactory, then amount covered by such expenditure or part thereof, is the case may be maybe, deemed to be the income of the assessee for such financial year. The proviso also says that when there is an addition under section 69C of the act such unexplained expenditure, which is deemed the income of the assessee, should not be allowed as a deduction under any head of income. In the present case, assessee has incurred certain expenditure, which is found during search in the seized documents, the seized documents also show the amount of undisclosed income and the amount of expenditure incurred for earning such income. In those circumstances, the disclosure of undisclosed income shows the source of such expenditure. Therefore, naturally net income in the seized document can be assessed as income. If the approach of the ld. AO is accepted then in such case, Income and its application both are taxable as income. This is not correct. In view of this we do not find any infirmity in the order of the learned CIT - A in deleting the addition of Rs. 54,830,909/- under section 69C of the act. Accordingl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt year 2020 - 21 and 2021 - 22. The learned assessing officer noted that from the image it is apparent that a sum of Rs. 13 lakhs to Rs. 18.60 lakhs per plot was received or receivable. According to that, he found that all 151-unit holders who are being handled by one broker Mr. Udhay Dahale in two different clusters has different prices. The AO noted that in case of one cluster, prizes Rs. 5,026,220 and in another cluster, it is Rs. 970,360/- respectively. Thus, the amount stated by the director does not commensurate with the amounts mentioned through cheque payments. The AO issued notice under section 142(1) of the act. Assessee claimed that the transactions appearing in the said evidence is between the buyers and the sellers through various brokers and assessee is neither a buyer nor a seller. Assessee however did not comment and stated that such evidence can be explained by the brokers only. The learned assessing officer rejected the contention of the assessee holding that such evidencehas been retrieved from the mobile phone of the promoter of the assessee group and therefore the onus lies on him to explain the content of said evidence along with documentary evidence. As the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the building has been received after construction by those buyers. iv. All these payments have been received in cheque by MIDC from various customers buying the plot. The assessee submitted the details of payment made and other documentary evidence in respect of several clients who purchased the property directly from MIDC. v. The payments have been made by the parties to the broker as well as to the assessee only after completion of the transaction and possession of the property are handed over to them. vi. The document found contains the names of the broker who brings clients to the assessee and respective payments made by the clients to the MIDC for purchase of the property in various clusters. vii. The total 281 clients purchased through various brokers property in MIDC for which assessee has charged a lump-sum fee of Rs. 1 lakh per unit and accordingly for eighty-one client's Rs. 1 lakh has been considered for each cluster. Accordingly, Rs. 2.81 crore is already offered for the transaction. viii. AO has enquired directly from the brokers about the above transaction who also confirmed the statement made by the director of the company. ix. AO made addition of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the assessee is that the name of the broker is mentioned who have dealt with in purchasing the land by the clients brought in by broker for MIDC allotment. Thus, on careful perusal of the document it is apparent that there are seven brokers who have brought in 282 clients. Out of these 282 clients , one client is directly brought in by the assessee. Therefore, the brokers in turn have brought 281 clients. For all these clients the total amount receivable for allotment of land is Rs. 46.54 crores, out of which Rs. 35.95 crores is received and balance of Rs. 9.52 crores is outstanding. The assessee has charged fees of Rs. 1 lakh per unit for 281 units sold through all these brokers for which occupation certificate is received and possession is granted to those parties. The explanation of the assessee before the AO was same, such statement was also confirmed by the broker, the land transferred to the various parties did not belong to the assessee therefore naturally the sale consideration of that land could not be the income of the assessee. As the land does not belong to the assessee the rates mentioned in the column number 2 of the seized documents is irrelevant for the taxa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f, various documents were found which itself shows that there is various expenditure incurred by the assessee for earning that income. The learned assessing officer rejected such claim and did not give any reason that why the claim of the assessee of net income offered should be rejected. The learned CIT - A found that the AO has made the addition of the entire gross receipts without allowing any claim of the expenditure such evidenceis available in the recorded statement and seized documents. It is the claim of the assessee that the gross income offered by the assessee for taxation is Rs. 71,577,000/- out of which 30% of the expenses should be granted as deduction and net income of Rs. 50,103,900/- can only be taxed. Before the learned CIT - A several arguments were raised stating that even direct evidence correlating the expenditure may not be available but reasonable estimate based on the seized documents should be made. Several judicial precedents were also pressed into service. The learned CIT - A examined details of net income offered by the assessee in the return of income filed were furnished by the assessee. Ongoing through the above details, it was noticed that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO is dismissed. 077. In the result, appeal filed by the learned AO is dismissed. 078. Now we come to the appeal filed by the assessee. 079. Ground number 1 of the appeal of the assessee is challenging the assessment order on legal ground, it was not pressed, and therefore it is dismissed. 080. Ground number 2 of the appeal is with respect to the addition of Rs. 85 lakhs and Rs. 5.10 crores confirmed by the learned CIT - A while deciding ground number two and three of the appeal of the revenue. The addition relates to ground number eight raised before the learned CIT - A which has been dealt with in paragraph number 10. The ground before the learned CIT - A was of addition of the alleged business receipts of Rs. 25.97 crores based on loose paper found. During search WhatsApp image was found from the mobile phone of the director Mr. Kaustubh latke containing the name of the Sailesh Patil - 2. It is a chat between Mr. Sailesh Patil and director of the assessee company. The chat has been sent by Sri Sailesh Patil -2. In the above chat at serial number 10, on 13 March 2021 a sum of Rs. 2.10 was stated to have been received on account of Sukhakarta cluster. There were no other charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t it is a consultancy charges received in cash from the agent Mr. Umang Jain. With respect to the sum of Rs. 40 lakhs on 15 March 2021, it was stated that these payments were received in cash, but he does not recall the exact details. With respect to another payment of Rs. 25 lakhs on 15 March 2021 is given the same explanation that the payments were received in cash, but he does not recall the exact details. Accordingly, the learned CIT - A noted that as in the statement of the director itself it is confirmed that these entries pertain to the amount received in cash, but he does not recall the details, the addition is required to be upheld in the hands of the assessee. Accordingly, he upheld the addition of Rs. 85 lakhs giving a reason that the explanation of the assessee that these documents belong to Mr. Sailesh Patil and therefore addition cannot be made in the hands of the assessee is not acceptable in absence of any retraction filed by the director of the company. Accordingly, he also did not give any benefit of deduction for expenditure at the rate of 30%, as the assessee has not owned this income. 083. Assessee is in appeal before us on this issue. With respect to the addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deciding ground number 10 of the appeal of the learned assessing officer, assessee is entitled to the deduction of the expenditure at the rate of 30%. Therefore, the learned assessing officer is directed to tax 70 percent of Rs. 20 lakhs as income of the assessee. 086. With respect to the addition of Rs. 40 lakhs and Rs. 20 lakhs received on 15 March 2021 where the assessee has stated that these payments were received in cash but he does not recall the exact details, and the learned CIT - A has confirmed the addition merely on the basis of the statement of the director of the company recorded under section 132 (4) of the act and further the statement of Angadia Mr. Sailesh Patil. In fact, Mr. Sailesh Patil is the right person to inform to whom this money belongs to. Because he is the person who has given this money to the assessee which has been confirmed by the director in his statement. If the income does not belong to anybody else, it will necessarily become the income of the assessee who received it. However, during statement recorded of Mr. Sailesh Patil, no such specific questions were raised with respect to these two entries. Therefore, in the interest of justice we restore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation) wide letter dated 12/1/2022 submitted on 11/2/2022. Accordingly, the claim of the assessee is that above sum is not received in cash but is a transaction with MIDC of that Buyer. 089. The learned departmental representative vehemently supported the order of the learned assessing officer and the learned CIT - A state in that the WhatsApp message of Mr. Sailesh Patil relates to cash transaction only and therefore the explanation of the assessee is not correct. He further submitted that why an Angadia will deal with cheque transaction. He submits that on the same date there is a transaction of Rs. 8500 charges by the Angadia. Therefore, such charges are only for giving Rs. 210 lakhs to the assessee and on the same Angadia charges of Rs. 8500 is deducted by Mr. Sailesh Patil. 090. On careful consideration of above facts, it is apparent that the learned assessing officer and the learned CIT - A has made the addition to the total income of the assessee considering the same as cash received from Mr. Sailesh Patil by the assessee. Both the lower authorities have not dealt with the above explanation, which is placed at page number 1150 of the paper book and placed before the invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the file of the learned assessing officer with similar direction. Assessee may produce relevant details in support of its claim. The LD AO may examine the facts and decide issue afresh. 091. The next entry is dated 15 March 2021 of Rs. 3 crores wherein the name of the party is mentioned as Nilawar and when the statement of the director is recorded under section 132 (4) he submitted that it is a consultancy charges received in cash from Mr. Prashant Nilawar in respect of sale of land in Pune. Therefore, the addition was made by the learned assessing officer in the hands of the assessee. The learned CIT - A has also confirmed the same. Before the lower authorities' assessee submitted (paper book page number 1131) that consultancy income is part of the total receipt of Rs. 3.24 crores accounted in the regular books of account during the financial year 2020 - 21. Therefore, the claim of the learned authorized representative is that the above sum has already been offered for taxation in the books of accounts. This is also the explanation given at the time of explaining the seized documents and reply to question number 80 and 81 of the directors of the company. Undoubtedly, in sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of purchase of 5.345 acres of land where the assessee was supposed to get remuneration of Rs. 500,000 per acre. It is the submission of the assessee that the above transaction has not at all materialized and this was merely a proposal with a rough working of the total probable price. The learned assessing officer has made an addition of Rs. 2,672,900/- on this account. The learned CIT - A also confirmed the same because the world 'paid ' is used in the document. The argument made by the assessee that assessee is not a partner, and the assessee should get a benefit of this noting because the document says that the assessee is not a partner. Further, it does not prove that the cash payments were made for transaction. Therefore, assessee is in appeal. 096. The learned authorized representative referred to the document, which is at page number 20 of the assessment order. He submits that that assessee was supposed to get the professional fees of Rs. 5 lakhs per acre on the registration of the document. The transactions have not been completed by the parties as it did not materialize, assessee also did not get any fees. Therefore, the above amount cannot be added in the hand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see as no income has accrued. This statement of the assessee has not been appreciated by the lower authorities. Undoubtedly, it is for the assessee to show that what is the land that was being discussed for purchase and to show that the transaction did not materialize. This fact could have been examined by examining Mr. Rajesh Saboo, who allegedly entered the transaction for purchase of the above land. The lower authorities have not at all examined purchasers. If the LD AO had examined the purchaser, it could have been ascertained with evidence that whether such transaction has materials or not. In view of this we set-aside the whole issue back to the file of the learned assessing officer with a direction to the assessee to substantiate that such transaction has not at all materialized. Naturally, if the above transaction has not materialized, no income can be taxed in the hands of the assessee. Then the assessee is required to explain transaction of Rs. 63 lakhs mentioned in that seized document also. It is also to be noted that assessee has categorically stated before the assessing officer (page number 1247) that seized documents pertains to some land transaction in the name of M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that there is an income of Rs. 380,000 in the hands of the assessee to be taxed. 0101. Before us, it was also stated that the same transaction may also be examined from Mr. Umang Jain whether he has already paid a cheque of Rs. 5 lakhs and another cheque of Rs 2,35,000/- or not. If these cheques are not paid, naturally the transaction has not materialized. 0102. The learned CIT DR vehemently submitted that when there is reference of Rs. 10 lakhs already paid by Mr. Umang Jain the transactions have concluded, and the income of the assessee has been correctly determined. 0103. We have carefully considered the rival contention and perused the orders of the lower authorities. It is the claim of the assessee before the lower authorities that the transaction remains unconcluded and did not materialize. The facts are identical to the addition of Rs. 2,672,900/- as discussed above. Whether the transaction has materialized or not would be evident if Mr. Umang Jain has paid cheque of Rs. 5 lakhs and Rs. 135,000/- for the above land purchase. If such cheques were paid, it would be known for what land the above transaction has happened, and the addition in the hands of the assessee to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registered on 'fourth'. It is further stated that the balance amount would be the charges of the GNP, which would be collected in due course of time. Similar to the other transactions there is also a cheque transaction of Rs. 12 lakhs to be paid to four farmers. Broker involved is also Mr. Umang Jain. As the claim of the assessee is that such transaction did not materials, it can be examined from the broker, from Registrar as land is identified, and from farmers who are also named. Therefore, as these examinations is not made by lower authorities, with similar direction as in other addition in this ground, we restore issue back to the file of the ld. AO, with direction to assessee to show whether this transaction has materialized or not by producing necessary evidence. LD may examine the same and decide it afresh. 0108. In the result, ground no 3 of the appeal is partly allowed with above directions. 0109. Ground no 4 is against charging of interest u/s 234 A , B and C which is consequential in nature , therefore, same is dismissed, 0110. In the result, ITA No 2547/M/2023 filed by assessee is partly allowed for statistical purposes. 0111. Thus, for Ay 2021-22, appeal o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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